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FOUNDATION HOSPITALS: DECISION ON CLASSIFICATION

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The Office for National Statistics has announced that, consistent ...
The Office for National Statistics has announced that, consistent

with international guidelines for national accounts, NHS foundation

trusts will provisionally be classified in the public sector as

central government bodies.

The decision, taken by the Public Sector Classification Committee

(PSCC) of the ONS, is based on the judgment that government has

control of the general corporate policy of NHS foundation trusts.

NHS foundation trusts are a new type of organisation, called a

'public benefit corporation'. They will have members instead of

shareholders. Some control of NHS foundation trusts will rest with

their directors and members, the majority of whom will be from the

private sector.

Foundation trusts will have additional freedoms, compared with

existing NHS trusts, but their ability to determine their general

corporate policy will be restricted by government involvement through

restrictions in both the planned legislation and regulatory powers:

- The imposition of borrowing limits

- A legal duty to follow NHS values

- Regulatory approval needed to amend constitutions

The ONS has decided that this involvement is sufficient to determine

the trusts as government controlled. This decision is provisional as

legislation on foundation trusts is going through parliament.

The PSCC also reviewed the classification of existing NHS trusts and

has decided that these should also be classified as central

government. They were previously classified as public sector

corporations.

The PSCC's terms of reference are to consider requests for

classification advice and to decide on the appropriate National

Accounts classification. Its members are drawn from ONS staff who use

their personal expertise and call on the views of others as necessary

in formulating their responses.

Decisions are consistent with the principles of the international

statistical manuals, European System of Accounts 1995 ( ESA95) and the

System of National Accounts 1993 (SNA93) and supporting manuals and

case law.

Eurostat, the statistical office of the European Union, has also

considered the classification of NHS trusts and NHS foundation trusts

and agrees with the ONS's conclusions.

BACKGROUND NOTES

1. Under the National Statistics Code of Practice all important

methodological decisions, and the reasons for them, are to be made

publicly available in advance of the statistics based on them.

Further information on this decision is available on the National

Statistics website at: www.statistics.gov.uk/nhsfoundationtrusts.

2. The UK government's fiscal policy framework uses key statistical

indicators for the public sector. These indicators are based on the

National Accounts produced by ONS and the public sector is defined in

terms of the institutions that belong to it. ONS follows

international standards in deciding the sector classifications of all

institutions. When government creates new institutions, ONS

determines their classification, paying particular attention to those

thatmight be in the public sector, due to the importance of the

fiscal policy framework. From time to time classifications are

reviewed. ONS uses the PSCC to formulate decisions and more

information on the Committee is at: www.statistics.gov.uk/psa

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